Cycle Trading

The swing low printed by the dollar on Friday indicated the possibility of a 14 day daily cycle low being left behind. The dollar negated that swing low by closing lower today.

We discussed here over the weekend that in order for day 14 to be an early daily cycle low, the dollar would need to break above the declining trend line. Instead of breaking above the declining trend line, the dollar was rejected in a clear and convincing manner by the convergence of the 50 day MA and the 10 day MA. The dollar peaked on day 8 and now the dollar has been in decline for 8 days. It appears that the dollar is now destined to seek out its daily cycle low.

The daily equity cycle peaked on day 10 and has been in decline since. Stocks lost the 50 day MA on Thursday and today closed below the lower cycle band. The close below the lower cycle band indicates that stocks on in an intermediate cycle decline. With another 8 days until stocks enter their timing band for a daily cycle low, stocks are destined to easily break below the previous daily cycle low of 2067.93 and possibly make a run at the 200 day MA, which currently sits at 2045.77.